Finding Money in a Credit Crunch

The credit crunch coupled with a recession means that access to capital has become scarce for most businesses and individuals alike. The crashing home prices have wiped away the ability of most individuals and small business owners to obtain cash from home equity withdrawals or in refinancing their house.

Credit cards are convenient but have never made sense for long term borrowing. Most of them have fees and interest rates that can strangle or trap the user in perpetual debt. An added consideration is that the bankruptcy rules have credit card debts next to impossible for one to shake off and start afresh.

It is a truism that the worst time to look for a loan is when you need one. So how does one find cash in a crunch? The most sensible way of course is to over time build a store of emergency cash fund by spending less than your income. For those who have not accumulated a stash of cash, an alternative might be to look at your other assets such as an IRA or 401(k).

Generally, withdrawals from an IRA or 401K are taxed at ordinary income rates, plus 10% penalty for those younger than 59 1/2. However, one can take up to a 60 day loan from an IRA without incurring tax penalties. And one can borrow money from a 401(k) generally to be paid back within 5 years. Borrowing from a 401(k) can be free of tax and tax penalty provided the loan is paid back on schedule.

Some who do not have a 401(k) with a loan privilege may be able to qualify to set up their own Self-Employed 401(k) with a loan feature. You can have a Self-Employed 401k if you have a business and no employees with the exception of other owners or a spouse. The business can be a new business or several years old, and the business can be in the form of a sole proprietorship, partnership, Limited Liability Company (LLC) or corporation.

Itís possible to roll over an existing IRA or 401k from a previous employer into their Self-Employed 401k plan. After establishing a Self-Employed 401k a small business owner can borrow up to $50,000, or one half of their 401k account balance, whichever is less.

A 401k loan is quick and easy to obtain because it comes out of your 401k balance. The loan can be used for any purpose. The loan interest is fixed at prime rate for the duration of the loan. Typically the loan must be repaid in equal installments over a five-year period. The loan payments, interest and principal, go back to your 401k account, so you are in essence paying yourself back.

Taking money out of a retirement account as a loan or withdrawal is not a decision to be taken lightly. It takes years to build up a nest egg and minutes to spend it. So make sure you have a solid reason and good use for the money before removing assets from your tax-deferred plan.

Anyone can visit www.investsafe.com to get more information kit on the 401K plan for the self-employed and small business owner.

Daniel Lamaute, Lamaute Capital, Inc. an investment brokerage firm that specializes in retirement plans for small business owners. Tax laws and regulations are complex and subject to change. Please consult your tax professional before making any investment decisions. http://www.InvestSafe.com

10 Most Recent Articles Written by Daniel Lamaute

In Fear of Retirement
Written by: Daniel Lamaute |
Distributed: 2008-05-08 |
Word Count: 646 |
Page Views: 3280
| Votes: 8 |
Rating: 3.38
Many baby boomers are staring at retirement like a deer caught on
oncoming headlights. They are not sure what to do or what else to
do. They fear that whatever they have in savings just might not
be enough. Less than 1 out of 5 workers felt very confident about
having enough money for a comfortable retirement, according to
the April 2008, EBRI Retirement Confidence Survey. And with good
reasons, inflation is zooming at the same time that asset values
are flagging.

Consolidating of High Rate Credit Card Debt with a 401K Loan
Written by: Daniel Lamaute |
Distributed: 2008-04-23 |
Word Count: 406 |
Page Views: 4163
| Votes: 8 |
Rating: 1.13
Banks are putting the squeeze on even their best long term card
holders at a time when other sources of credit, such as home
equity loans for example, are harder to come by. A lot of people
are shocked to receive notices that their credit card rate has
jumped to as high as 28 percent even though they've kept good
credit and an excellent payment history.

Using a 401K Loan to Stop Foreclosure
Written by: Daniel Lamaute |
Distributed: 2008-02-11 |
Word Count: 465 |
Page Views: 9570
| Votes: 18 |
Rating: 1.83
A bankruptcy or foreclosure can cripple one's ability to obtain
decent credit for many years. In addition, some employers and
landlords won't hire or rent to a candidate with terrible credit
history. Thus, it is a good idea to discuss all options with a
financial planner before ending in bankruptcy or foreclosure.

Starting A Business After Retirement
Written by: Daniel Lamaute |
Distributed: 2007-10-23 |
Word Count: 565 |
Page Views: 4367
| Votes: 10 |
Rating: 3.00
For a lot of people retirement is but a transition that frees
them to live their dream of running their own business. Census
figures show that about 20 percent of those in their 50s were
self-employed. But, twice that, a whopping 40 percent of those
working past age 70 are in business for themselves.

Selecting Between a 401(k) And 403(b) For a Nonprofit
Written by: Daniel Lamaute |
Distributed: 2007-10-11 |
Word Count: 333 |
Page Views: 13239
| Votes: 21 |
Rating: 2.38
Newly released IRS regulations impose several new requirements
and fiduciary responsibilities on employers with 403(b) plans.
While the regulations generally don't take effect until January
1, 2009, there are some provisions that apply sooner.

401K Loans for Emergencies
Written by: Daniel Lamaute |
Distributed: 2007-10-10 |
Word Count: 343 |
Page Views: 3447
| Votes: 10 |
Rating: 2.70
For many people the quickest way for them to access an emergency
loan quickly is to tap their credit cards, or their retirement
account. But these methods have their drawbacks. Credit cards
generally carry high double digit interest rates and wicked fees.
On the other hand, early withdrawals from an IRA or 401K can
trigger tax and penalties of up to 45% of the money withdrawn.

The Individual 401k - BIG Business Benefits For The Home Business
Written by: Daniel Lamaute |
Distributed: 2006-04-18 |
Word Count: 0 |
Page Views: 2195
| Votes: 1 |
Rating: 0.00
Major mutual fund and investment management companies now offer
self employed individuals 401k plans that are easy to install
and administer at very low cost. What's more independent
contractors and small business owners can borrow part of
their retirement savings tax-free and penalty free by taking
advantage of a loan provision in these new plans.

Unemployment May Require a 401(k) Defensive Strategy
Written by: Daniel Lamaute |
Distributed: 2006-04-11 |
Word Count: 0 |
Page Views: 1909
| Votes: 1 |
Rating: 0.00
We all plan and prepare for what lies ahead of us, but can we
truly know what our future holds? In all of our planning, we
never seem to account for that Mack truck barreling down the
freeway, out of control and on a direct path for our vehicle.

Most Recent "Finance" Articles

Credit Card Companies Reward Consumers Who Shop Around
Written by: Braxton Heitz |
Distributed: 2012-11-20 |
Word Count: 1159 |
Page Views: 5259
| Votes: 14 |
Rating: 1.86
With Ronald Reagan came mass deregulation in many industries. One
of the industries that benefited from deregulation was the
financial industry. As a result, hundreds of new financial
companies were introduced to the American consumer during the
1980's. With the sudden explosion of new competitors in this
industry, credit card companies began to struggle with how to
retain existing customers and to recruit new customers.

Understanding Your 401(k), IRA and Other Pre-Tax Investments
Written by: Irene A. Majchrzak |
Distributed: 2010-08-03 |
Word Count: 1005 |
Page Views: 3774
| Votes: 2 |
Rating: 2.50
What does all of the bad economic news mean to you, the
average investor. Well, if you are still working and
contributing to your pre-tax 401(k)'s, 403(b)'s, or IRA
savings your strategies for salvaging your retirement will
include reviewing all of the investment options found in
your 401(k), etc.

Payday Advance Loans Are Now Only One Toll Free Call Away
Written by: Tom Tierney |
Distributed: 2010-07-27 |
Word Count: 599 |
Page Views: 2999
| Votes: 1 |
Rating: 0.00
A friend of mine recently went through financial troubles
and asked me, knowing that I'm a finance writer, if I could
push him in the right direction for a short term loan to
help out with his expenses. Here's his story:

Stock Market Falls Sharply
Written by: Irene A. Majchrzak |
Distributed: 2010-07-27 |
Word Count: 879 |
Page Views: 3404
| Votes: 5 |
Rating: 0.80
The stock market has been having a bad week. Wednesday the
market ended the day down over 300 points. I heard reports
that this was the result of investors taking their profits.
Happens all the time. Then within a few days, the prices on
many great stocks is so low that the investors are buying
the stocks right back up.

Do You Know the Difference Between an Investment Advisor and a Broker?
Written by: Tome Tomaj |
Distributed: 2010-03-11 |
Word Count: 408 |
Page Views: 3241
| Votes: 5 |
Rating: 3.40
As an fee-only investment advisor I come across clients from
all walks of life. Lately I have noticed something in common
with many of these investors. Many do not know the
difference between an investment advisor and a broker who
manages and/or makes securities recommendations for their
clients' investment portfolios. With the almost
unprecedented volatility in the securities markets, you
cannot afford to dig your head in the sand when it comes to
whom is managing your assets.

Understanding Term Life Insurance and Getting Quotes
Written by: Brian Greenberg |
Distributed: 2010-01-13 |
Word Count: 520 |
Page Views: 3145
| Votes: 2 |
Rating: 1.00
Buying term life insurance can be a scary process but
understanding the different types of life insurance can
remove the fear. What you should know about term life and
how requesting life insurance quotes online can be easy and
very convenient.

The Decline in the Personal Savings Rate - What Happened to the Discipline?
Written by: Tome Tomaj |
Distributed: 2009-12-15 |
Word Count: 873 |
Page Views: 3848
| Votes: 5 |
Rating: 1.40
As more and more American baby boomers are nearing and
entering their retirement years, many of them are concerned
about whether their retirement savings will last them long
enough to ensure their current quality of life, and rightly
so.

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A Better Way To Sell A Structured Settlement - Via Auction
Written by: Clayton Frantz |
Distributed: 2007-11-30 |
Word Count: 1342 |
Page Views: 10842
| Votes: 11 |
Rating: 2.00
Structured settlements were introduced in Canada and the United
States in the 1970's. They were introduced as an alternative to
lump sum payments, common in insurance settlements and lottery
winnings. In the decades since, they have also been accepted as
legal financial instruments in England and Australia. In a
nutshell, a structured settlement by legal definition is a
statutory agreement to pay a specified sum of money over a period
of time, on a payment system.

Using a 401K Loan to Stop Foreclosure
Written by: Daniel Lamaute |
Distributed: 2008-02-11 |
Word Count: 465 |
Page Views: 9570
| Votes: 18 |
Rating: 1.83
A bankruptcy or foreclosure can cripple one's ability to obtain
decent credit for many years. In addition, some employers and
landlords won't hire or rent to a candidate with terrible credit
history. Thus, it is a good idea to discuss all options with a
financial planner before ending in bankruptcy or foreclosure.

Why Over 3,000 US Companies Have Chosen the Frankfurt Stock Exchange to Go Public
Written by: Ron Crowe |
Distributed: 2008-07-31 |
Word Count: 786 |
Page Views: 7339
| Votes: 17 |
Rating: 1.88
The Frankfurt Stock Exchange, one of the world's largest trading
centers for securities, has over 3,000 United States companies
listed. North American and other foreign companies are choosing
Europe, over the United States, to go public because of the
punishing Sarbanes Oxley Act introduced in the United States in
2002.

How to Avoid Private Mortgage Insurance (PMI)
Written by: Jim Cramer |
Distributed: 2008-02-20 |
Word Count: 523 |
Page Views: 5453
| Votes: 7 |
Rating: 2.14
There is more than one way to get your desired home without
having the 20 percent down payment and avoid PMI at the same
time.

Credit Card Companies Reward Consumers Who Shop Around
Written by: Braxton Heitz |
Distributed: 2012-11-20 |
Word Count: 1159 |
Page Views: 5259
| Votes: 14 |
Rating: 1.86
With Ronald Reagan came mass deregulation in many industries. One
of the industries that benefited from deregulation was the
financial industry. As a result, hundreds of new financial
companies were introduced to the American consumer during the
1980's. With the sudden explosion of new competitors in this
industry, credit card companies began to struggle with how to
retain existing customers and to recruit new customers.

The Effect of Inflation and Deflation on Retirees
Written by: Irene A. Majchrzak |
Distributed: 2009-10-27 |
Word Count: 1324 |
Page Views: 5239
| Votes: 6 |
Rating: 0.83
When we worry about how long our retirement income will
last, we consider so many factors. The current economy is
causing a drain on 401(k)'s and IRA's. So we have become
much more cautious about withdrawing money to use it as part
of our pensions.

Highest Ranked "Finance" Articles

Identity Theft: The New Threat to Your Credit
Written by: Josh Pike |
Distributed: 2006-08-24 |
Word Count: 363 |
Page Views: 3980
| Votes: 9 |
Rating: 3.56
When we think of thieves, images of burglars creeping into homes
and apartments come to mind. However, there are new thieves that
can take much more than your money or possessions. If your
personal information falls into the hands of an identity thief,
your credit and finances can be ruined.

Do You Know the Difference Between an Investment Advisor and a Broker?
Written by: Tome Tomaj |
Distributed: 2010-03-11 |
Word Count: 408 |
Page Views: 3241
| Votes: 5 |
Rating: 3.40
As an fee-only investment advisor I come across clients from
all walks of life. Lately I have noticed something in common
with many of these investors. Many do not know the
difference between an investment advisor and a broker who
manages and/or makes securities recommendations for their
clients' investment portfolios. With the almost
unprecedented volatility in the securities markets, you
cannot afford to dig your head in the sand when it comes to
whom is managing your assets.

In Fear of Retirement
Written by: Daniel Lamaute |
Distributed: 2008-05-08 |
Word Count: 646 |
Page Views: 3280
| Votes: 8 |
Rating: 3.38
Many baby boomers are staring at retirement like a deer caught on
oncoming headlights. They are not sure what to do or what else to
do. They fear that whatever they have in savings just might not
be enough. Less than 1 out of 5 workers felt very confident about
having enough money for a comfortable retirement, according to
the April 2008, EBRI Retirement Confidence Survey. And with good
reasons, inflation is zooming at the same time that asset values
are flagging.

A Recipe for Good Credit
Written by: Josh Pike |
Distributed: 2006-08-17 |
Word Count: 369 |
Page Views: 2942
| Votes: 8 |
Rating: 3.13
If your credit is not as good as you want it to be, take action
now! It's easier than you think to improve your credit.

Medicaid Asset Protection
Written by: Rocco Beatrice |
Distributed: 2007-01-23 |
Word Count: 646 |
Page Views: 3626
| Votes: 8 |
Rating: 3.00
Learn how to include senior Medicaid asset protection as part of
your senior tax planning strategies. What are the tax
implications of Medicaid and why it needs to be planned
carefully? About seniors Medicaid asset protection as part of the
senior tax planning strategies. Explains the new 5-year look back
provisions for seniors to qualify for Medicare assistance into
nursing home program.

Equipment Financing and The Five Cs of Credit Evaluation
Written by: Sean Marten |
Distributed: 2007-10-17 |
Word Count: 698 |
Page Views: 3415
| Votes: 7 |
Rating: 3.00
Equipment financing lenders, as well as banks, use the Five Cs to
evaluate loan applications: Character, Credit, Cash Flow,
Capacity and Collateral. However, while banks look at
small-to-medium size companies from a Fortune 500 perspective,
equipment financing companies see applicants from a small
business perspective, which highlights a sixth C: Common Sense.

How Do You Make Money In Currency Trading?
Written by: Tom Howze |
Distributed: 2007-12-05 |
Word Count: 727 |
Page Views: 2784
| Votes: 8 |
Rating: 3.00
The question, "How do you make money in currency trading?" is
being asked by investors and potential investors worldwide as
they witness the multi-year downturn trend of the US dollar and
upswings in other currencies such as the Euro or Canadian Dollar.

Reverse Mortgage Costs Are Not Too High
Written by: N. Sioris |
Distributed: 2008-07-29 |
Word Count: 1120 |
Page Views: 3344
| Votes: 7 |
Rating: 3.00
Reverse mortgage costs are repeatedly cited as one of the main
reasons for seniors not to get a reverse mortgage loan. However,
the same folks that harp on costs as being a reason not to use
this financial resource rarely offer a less expensive option or
an alternate proposal. Don't fall into the trap of listening to
the negative hype without doing your own research. Find out what
the true costs are and whether they are justified or not. Compare
the cost of a reverse mortgage to the cost of selling your home,
downsizing or moving into assisted living. Pull back the curtain
and take a good look, then make your own determination. Don't
base your decision on an uninformed friend, relative or media
reporter.

3 Mistakes Guaranteed to Increase Your College Costs
Written by: Marc R. Hill |
Distributed: 2009-04-02 |
Word Count: 959 |
Page Views: 2535
| Votes: 5 |
Rating: 3.00
The decision to reduce your college costs is entirely in your
hands. While it's commonly believed that there's nothing you
can do to reduce these expenses, as a financial planner and as a
parent, I can assure you that the strategies not only exist, but
they're also very effective. But on the flip side of the college
funding coin, there are some pricey mistakes that any parent can
make. Let's take a look at three of these mistakes.

How to Invest in a Rough Economy: Investment Advice from the Experts
Written by: Sarah Simmons |
Distributed: 2009-07-08 |
Word Count: 692 |
Page Views: 2925
| Votes: 9 |
Rating: 3.00
The stock market crash of 2008 lost many investors a lot of
money, and had many other investors bailing out of stocks for the
safety of savings and checking accounts, treasury bills and gold.
However, it is still possible to invest - and yes, even make
money - during the current rocky economy.